Kuwait Real Estate Market Overview
Historical Performance
- The Kuwait real estate market has been performing well in recent years, with a recovery phase that began in 2020.
- According to the Markaz Real Estate Macro Index, the market is close to the upper range of the current market phase. This indicates that the recovery is well underway and the market is expected to accelerate soon.
- Overall, real estate transactions declined by 2.8% from January to September 2022, weighed down by a decline in transactions in the private housing segment.
- The natural oil GDP growth rate is expected to be 2.0% in 2023, lower than 12.4% in 2022, owing to production cuts mandated by OPEC+ and the anticipated decline in demand for oil on fears of a global recession.
- Kuwait’s economic growth is expected to moderate in 2023 to 0.9% compared to 8.2% in 2022, owing to lower output from the oil sector.
Current Trends and Drivers
- Non-oil economic activity is expected to grow at 3.4% in 2023, indicating that Kuwait’s non-oil sector is becoming an increasingly important driver of economic growth.
- The real estate market in Kuwait is projected to grow by 1.46% from 2024-2028, resulting in a market volume of US$0.89tn in 2028.
- The COVID-19 pandemic has significantly impacted the real estate market in Kuwait, with a decline in the number of transactions and prices in some segments of the market.
- However, the market has shown resilience in the face of the pandemic, with a recovery in specific market segments, such as commercial real estate.
- The Kuwaiti government implements various macroeconomic fundamentals to support the real estate sector, including developing new infrastructure projects and relaxing specific regulations to attract foreign investment.
Overall, the Kuwait real estate market is expected to continue its recovery and growth in the coming years, driven by macroeconomic fundamentals and the increasing importance of the non-oil sector in its economy.
Impact of Economic Policies on Real Estate
Fiscal Policies and Real Estate Dynamics
- Fiscal policies have a significant impact on the real estate sector in Kuwait.
- The government’s economic reforms and initiatives have had a positive impact on the sector, particularly in terms of attracting foreign investment.
- Introducing new socioeconomic policies has led to increased investor confidence, resulting in more real estate development projects.
- The New Kuwait 2035 development plan has been a significant driver of growth in the sector, with a focus on infrastructure development and the creation of new residential and commercial properties.
Monetary Policies and Financing
- Monetary policies and financing play a crucial role in the real estate sector in Kuwait.
- Interest rates directly impact the cost of financing for real estate projects, which can affect the sector’s overall profitability.
- The Central Bank of Kuwait has implemented various policies to support the sector, including reducing interest rates and introducing new financing options.
- The COVID-19 pandemic has significantly impacted the global economy, including the real estate sector in Kuwait.
- The pandemic has led to a slowdown in economic activity and a decline in oil prices, affecting the sector’s growth prospects.
- However, the sector has shown resilience in the face of the pandemic, with continued growth in the investment and commercial real estate segments.
- According to reports by Marmore MENA Intelligence and Kuwait Financial Centre (Markaz), the real estate sector in Kuwait is expected to remain stable and experience robust growth in the coming years, with GDP growth projected to be positive at 3.6% year-on-year in H1 2024.
Residential Real Estate Sector
Market Analysis
The Kuwait real estate market has been stable, with average prices and rents holding steady and residential rents growing by 3.4 percent year on year in the second half of 2023, according to a report by research company Markaz. The report also indicates that the residential sector is expected to grow in 2024, with a projected growth rate of 1.46%, resulting in a market volume of US$0.89tn in 2028, as per Statista Market Forecast.
Private Housing Trends
Private residential housing remains popular among expatriates and locals, with many opting for apartments over standalone houses. The demand for residential apartments has been on the rise, with a steady increase in occupancy rates.
Here are some key trends in the private housing segment:
- Rental rates for residential apartments have remained stable, with a modest increase of 3.4% in the second half of 2023.
- The transaction value for residential properties has increased, with the demand for affordable housing options.
- Residential land prices have remained stable, with no significant increase or decrease in recent years.
- The private housing segment has seen a rise in expatriates, driving demand for rental properties.
- Istithmari, a real estate investment company, has invested in the residential sector focusing on affordable housing options.
Overall, the residential real estate sector in Kuwait is expected to continue to grow steadily, with a focus on affordable housing options and a rise in the number of expatriates driving demand.
Commercial Real Estate Sector
Market Insights
Kuwait’s commercial real estate sector has shown signs of stability in recent years. According to the Kuwait Real Estate Report 2023 Outlook, the overall real estate transactions have declined by 2.8% from Jan-Sep 2022, weighed by a decline in transactions in the private housing segment. However, the commercial sector has shown growth in recent times, with the commercial sector sales reaching KD 458 million (USD 1.5 billion) in H1 2023, which is a decline of 21% YoY.
Commercial Sector Growth
The growth in the commercial sector can be attributed to the increasing liquidity in the GCC economies, which has led to a rise in foreign investment. Additionally, the construction of new commercial properties has also contributed to the growth of the commercial sector. The real estate price index for the commercial sector has remained stable, with property prices holding steady.
Here are some critical insights into the growth of the commercial real estate sector in Kuwait:
- The commercial sector sales reached KD 458 million (USD 1.5 billion) in H1 2023, which is a decline of 21% YoY.
- The commercial sector has shown growth in recent times, with the overall real estate transactions declining by 2.8% from Jan-Sep 2022, weighed by a decline in transactions in the private housing segment.
- The growth in the commercial sector can be attributed to the increasing liquidity in the GCC economies, which has led to a rise in foreign investment.
- The construction of new commercial properties has also contributed to the growth of the commercial sector.
- The real estate price index for the commercial sector has remained stable, with property prices holding steady.
In conclusion, Kuwait’s commercial real estate sector has been showing signs of stability and growth in recent times. The decline in overall real estate transactions has been offset by the growth in the commercial sector, which has been fueled by increasing liquidity in the GCC economies and a rise in foreign investment. The construction of new commercial properties has also contributed to the growth of the commercial sector.
Investment and Market Opportunities
Investor Sentiment
Investor sentiment in Kuwait’s real estate market remains positive despite the challenges posed by the global recession and the pandemic. According to the Real Estate Macro Index Score, the market is at the stage of recovery and gathering pace, with a 3.4 out of 5.0 score. This suggests the recovery is well underway, and the market is expected to accelerate soon.
Furthermore, the Central Bank of Kuwait’s recent decision to allow financing companies to issue mortgages is expected to boost the real estate investment market. This is likely to attract more citizens and expats to invest in the market, leading to increased demand and higher real estate sales.
Emerging Subsectors
The pandemic has increased demand for private residential housing sales as people seek more spacious and comfortable living arrangements. This has resulted in a decline in the value of transactions in the commercial sector, while prices and rents in the residential sector have held steady.
In addition, the government’s socioeconomic policies and real estate reforms have created opportunities for emerging subsectors, such as rentals and affordable housing. These subsectors are expected to experience high demand in the coming years as the government seeks to mitigate the impact of the pandemic on the national economy and maintain a fiscal balance.
Other Opportunities
Kuwait’s real estate market is closely linked to the economic growth momentum of Saudi Arabia and the UAE, major trading partners. The IMF projects that the UAE economy will witness steady growth in 2023, while Saudi Arabia’s economic growth momentum is expected to continue.
Investors can also take advantage of the low inflation levels in Kuwait, which have remained stable over the past few years. Additionally, the KSA
The Real Estate Price Index offers essential information about the Saudi Arabian real estate market, Kuwait is neighbor.
In general, investors can find a variety of short- and long-term market and investment opportunities in Kuwait is real estate market.
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Frequently Asked Questions
What is the projected growth rate of Kuwait’s real estate market in the coming year?
- According to the Kuwait Real Estate Report H1 2023 Outlook, Kuwait’s real oil GDP growth rate is expected to be 2.0% in 2023, lower than 12.4% in 2022, owing to production cuts mandated by OPEC+ and anticipated decline in demand for oil on fears of a global recession. Non-oil economic activity is expected to grow at 3.4% in 2023.
- The Kuwait Real Estate Report – H2 2023 Review and H1 2024 Outlook states that Kuwait’s real estate was stable in 2023. While prices and rents held steady, there was a decline in the value of transactions as the pent-up demand post-pandemic began to normalize.
How do current cap rates in Kuwait compare to the regional averages?
- The search results do not provide information on current cap rates in Kuwait compared to regional averages.
What are the key factors driving the real estate market in Kuwait?
- According to the Kuwait Real Estate Report 2023 Outlook, Kuwait’s real estate sector has recovered from the lows caused by the pandemic. Overall real estate transactions have declined by 2.8% from Jan-Sep 2022, weighed by the decline in transactions in the private housing segment.
- The report also highlights that the outlook for Kuwait’s real estate market in the coming years appears positive, driven by economic stability, government initiatives, and evolving trends.
How have Kuwait’s real estate prices changed over the past five years?
- The search results do not explain how Kuwait’s real estate prices have changed over the past five years.
What trends are predicted to influence Kuwait’s real estate market shortly?
- The Navigating Kuwait’s Real Estate Landscape: Trends for 2024 report states that the outlook for Kuwait’s real estate market in the coming years appears positive, driven by economic stability, government initiatives, and evolving trends.
- The report highlights that the increasing demand for affordable housing, the government’s focus on infrastructure development, and the growth in the retail sector are some key factors expected to influence Kuwait’s real estate market shortly.
How does Kuwait’s real estate investment climate compare to other Gulf countries?
- The search results do not provide information on how Kuwait’s real estate investment climate compares to other Gulf countries.
